This invention relates generally to processing transactions associated with financial transaction card accounts and, more particularly, to network-based methods and systems for processing payment card transactions initiated by a cardholder using a cardholder controlled input device.
Historically, the use of “charge” cards for consumer transaction payments was at most regional and based on relationships between local credit issuing banks and various local merchants. The payment card industry has since evolved with the issuing banks forming associations (e.g., MasterCard®) and involving third party transaction processing companies (e.g., “Merchant Acquirers”) to enable cardholders to widely use charge cards at any merchant's establishment, regardless of the merchant's banking relationship with the card issuer.
For example, FIGS. 1 and 2 of the present application show exemplary payment-by-card systems. FIG. 1 shows an exemplary private label payment card system, and FIG. 2 shows an exemplary multi-party payment card industry system for enabling payment-by-card transactions in which the merchants and issuer do not need to have a one-to-one special relationship. Various scenarios exist in the payment-by-card industry today, where the card issuer has a special or customized relationship with a specific merchant, or group of merchants. These special or customized relationships may, for example, include private label programs, co-brand programs, proprietary card brands, rewards programs, and others. The special or customized issuer-merchant relationships often require direct communications between the parties for transaction authorization and/or clearing (e.g., for financial transactions). Further, the issuer may be required to maintain back office processes to manage the financial aspects of these special or customized relationships. Alternatively, the issuers may exploit communications through merchant acquirers to facilitate indirect communications with the merchants.
There are also scenarios in the payment-by-card industry where the card issuer does not have a special or customized relationship with a specific merchant, or group of merchants. These types of transactions are typically processed using a multi-party payment card system similar to the one shown in FIG. 2.
Traditional card account payment environments involve a merchant-controlled point of interaction (POI). Traditional points of interaction include point of sale devices, access through a merchant website, and interaction through a merchant telephone to initiate the authorization request. Collectively, these traditional points of interaction might be referred to as a merchant environment. For all interactions within this environment, an account number associated with a cardholder's financial transaction card is entered into the specific merchant's environment in order to conduct the transaction and/or obtain an authorization.
The specific cardholder interactions could include the cardholder giving his financial transaction card to a merchant to swipe or key into the merchant point of sale device, the merchant initiating a telephone call and entering the account number through interactive voice or through the telephone keypad, the cardholder himself swiping his card into the merchant's point of sale device, or the merchant or cardholder entering the account number into the merchant's website. Payments for approved transactions are managed with the issuer or merchant's acquirer based on the specific card payment network or closed loop environment.
One problem with the merchant environment is that the card and the account number are exposed to potential fraud. Though various security features for the card and account number are used, a more secure environment is needed. Consideration is now being given to ways to enable account holders to utilize their accounts remotely from the above listed devices, such that the account holder can initiate or “push” transactions which are then processed over the bankcard network without a merchant-controlled POI.
Another problem with the merchant environment is the cost associated with the merchant having to communicate with the issuer, the merchant acquirer and/or the payment card network. These costs include costs for both equipment and data transmission. In some cases, merchants are not able to afford these costs, and therefore, these merchants are unable to take advantage of the payment-by-card systems. In other cases, the merchants may be able to afford the upfront equipment costs and/or data transmission costs for each transaction being processed, but are required to pass these costs on to their customers. In some cases, these costs may be passed on to customers that do not even utilize the payment-by-card system. Further, in some cases, a merchant may wish to accept payment cards but lack the capacity, for a variety of reasons, to connect to the payment card network.
Accordingly, it would be beneficial to have a payment-by-card system that allows the cardholders to initiate a transaction using a cardholder controlled input device for a variety of reasons including improved security and reduced merchant costs. Such a system would allow a merchant to reduce its upfront equipment costs and its data transmission costs since the cardholder input device would be utilized for performing at least part of the transaction.